Doctors Co. Says It Will be Exonerated in Federal Probe
In its first comment on the investigation, Doctors Co. released a statement saying an internal review “has found no evidence that either the Doctors Co. or any of its employees have violated the law.” The company also scolded the California Department of Insurance for “commenting publicly on certain sensitive aspects of its regulatory approval process.”
According to the insurance department, the investigation is targeting the company and/or one or more current or future employees. The probe concerns possible unauthorized access into SCPIE’s computer system. A spokesman for the U.S. Attorney’s Office for California’s Central District, which covers SCPIE’s home base of Los Angeles, declined to comment, saying he could not confirm nor deny an investigation.
The Doctors statement noted that state insurance regulators approved the merger after considering “all specific criteria under the statute governing approval.”
In approving the merger, the insurance department cited an opinion from the California Attorney General’s office concluding that Doctors’ acquisition of SCPIE “would not substantially lessen competition” in medical-malpractice insurance in the state (BestWire, June 27, 2008).
Insurance Department General Counsel Adam Cole also said two directors and an officer of Doctors Co. — none of whom are still with the company — “made statements to the department in connection with the application that later turned out to be false or misleading” (BestWire, June 27, 2008).
In its statement, Doctors Co. declined to comment on any specific employment actions, but said, “The company takes very seriously the importance of transparency and correctness in all of its regulatory filings. Once the allegations of omissions and/or misleading statements were surfaced, the company took appropriate actions after a review of the facts.”
In a separate announcement, Doctors Co. said the addition of more than 8,000 physician policyholders makes it the largest national insurer of physician and surgeon medical liability in the United States with more than 43,000 physician members, 19,000 of whom are in California.
On June 30, SCPIE became a wholly owned subsidiary of Doctors Co. (BestWire, July 1, 2008). SCPIE delisted from the New York Stock Exchange following the merger. SCPIE shareholders had approved the merger by a nearly two-to-one majority on March 26 in a transaction valued at $28 in cash per share of SCPIE stock. SCPIE valued the total transaction at about $296 million.
Doctors Company Insurance Group currently has a Best?s Financial Strength Rating of A- (Excellent).
The five largest providers of medical-malpractice coverage in California, according to 2007 A.M. Best Co. state/line data, were: Norcal Group, with a 19.6% market share; Doctors Company Insurance Group, 18.8%; SCPIE Cos., 14.2%; American International Group Inc., 6.7%; and MIEC Group, 4.4%.
(By Sean P. Carr, senior associate editor, BestWeek: Sean.Carr@ambest.com)